Table of Contents

Hit four birds with one stone: engage employees, motivate sales teams, gain customer loyalty, and orchestrate channel partner behavior.

What we just made is not an empty claim. Research reports support it quite well.

  • 69% of employees would like to receive a gift card as a reward from an employer.
  • 68% of consumers prefer gift cards as incentives over coupons and other rewards.
  • Companies using non-commission sales incentives, such as gift cards, increased revenue by 32%.

What are Digital Gift Cards?

Digital gift cards are electronic counterparts of physical gift cards that can be sent directly to the recipient’s email address or added to the recipient's mobile wallet. Digital gift cards are also known as e-gift certificates, vouchers, or tokens in different parts of the world.
  • These cards usually have a fixed monetary value added by the giver or card issuer. Banks or branded stores issue these gift cards, and recipients use them to make purchases at the respective stores.
  • The recipients can redeem the card while purchasing at allowed stores online or in person. Usually, such cards cannot be cashed out and may have an expiry date.

Employers or organizations widely use digital gift cards as rewards or gifts. Retailers and marketers may also distribute them as part of a consumer promotion strategy to entice the recipient to come in or return to the store, and at times such cards are called cash cards. Digital gift cards also find a good use case to motivate channel partners and sales teams as an incentive.

It’s also possible to have virtual American Express, MasterCard, and Visa as digital gift cards. Holders can use such cards just as regular debit cards for making purchases. They are also a popular choice for cashback marketing strategies.

What are Digital Gift Card Campaigns?

When digital gift cards are distributed to increase sales, drive engagement, or achieve a specific purpose, they turn into campaigns. Businesses can structure these campaigns for customers, employees, sales, or channel partners, depending on the target audience or the campaign's purpose.
  • Digital gift card campaigns are a great way to engage and acquire new customers, create stronger relationships, increase brand awareness and boost sales. They are also a way to encourage customers to keep coming back to your brand.
  • For instance, gift cards are a popular choice in re-engagement campaigns. Haven’t seen a customer for a while? Send them a gift card and tempt them into coming back to shop. Many brands launch such programs just before the holiday season. The timing almost guarantees redemption.
  • Digital gift cards also make a great use case for loyalty programs, referral programs, giveaways, and contests.

Digital gift cards for employees on special occasions - birthdays and anniversaries make them feel special. Employers also tie digital gift cards as rewards for achieving sales targets. The convenience and versatility of digital gift cards allow the freedom of possibility, making options to roll them out limitless.

Why are Digital Gift Cards Imperative for Business Growth?

It’s essential to sync with the times, trends, and technology. Not only with products and services but also with incentivization, access to rewards, and loyalty programs. Structuring a cumbersome reward program can be done at the click of a button. This is where digital gift cards come in.

Here are some reasons that make digital gift cards an excellent incentivization and sales instrument:

1. Digital gift cards are what people want

Gift cards have been the most popular items on wish lists for 14 years. A gift card is akin to receiving a gift instead of discounts that feel like sales promotions. This effect makes it more likely for customers to make a purchase.

55% of consumers said they were interested in giving or receiving digital gift cards that they could add to a mobile app or digital wallet, especially millennials.

2. Digital gift cards provide a seamless online experience

As someone looking to send out rewards to persons who may be spread across geographies, time becomes of the essence. Businesses can send digital rewards cards to thousands of people with just a few clicks.

What’s more? It allows for instant gratification and hassle-free redemption for the receiver. This makes the whole experience seamless for both the giver and the receiver creating a win-win situation.

3. Digital gift cards allow for omnichannel integration

Digital gift cards are versatile because businesses can send them via email, add them to the receiver's mobile wallet or even send them via SMS. These gift cards can be redeemed online and in brick-and-mortar stores.

So they can act as a gateway connecting online interactions to offline experiences. And this becomes a tool to enable omnichannel integration.

4. They offer the freedom of choice

As opposed to a pre-decided reward or gift, digital gift cards allow the receiver to choose from an array of options. They will enable the receiver to get what they want right at the point of receipt. They are also easier on the giver because they allow for personalization without being hyper-personal.

5. They are apt for digital-savvy audiences

Millennials are a dominant part of the market force today, and GenZers are a large part of the workforce. These audiences are most comfortable shopping virtually and connecting with businesses online. Digital gift cards have become the perfect incentive tool for the digital-savvy generation, who prefer digital shopping to plastic by 150%.

6. They can reach anywhere remotely

This new age and hybrid work culture world has made remote connections paramount in any organization. Digital gift cards allow businesses to reach out remotely to employees, customers, partners, and team members worldwide. They help erase boundaries between companies and those who support them.

7. They have a high operational efficiency

Changes that drive up efficiency are essential to every organization. But most times, making these changes can be slow and frustrating. Digital gift cards are a simple, efficient way to reward those making beneficial changes happen. On the other hand, physical gift cards add to administrative hassles of acquisition, sending ahead, ensuring timely delivery, etc.

8. They give you access to user and campaign data

Digital gift cards can easily integrate with the software you use to manage loyalty programs. It’s easy to track how gift cards are used, who prefers to buy what, and demographic data, among other things. This data, when studied, can help build more efficient reward programs.

Types of Digital Gift Cards

Digital gift cards can be classified into various types and these include:

1. Open loop cards

These cards can be used anywhere as they run on credit card systems. They are redeemable online or in stores, at whichever merchants such cards are accepted. Cards such as Mastercard and Visa are examples.

2. Closed loop cards

Closed loop cards or single-store gift cards can only be redeemed at the merchant listed on the card. For example, Starbucks or Amazon cards can only be redeemed at their outlets and nowhere else.

Some Family of Store Gift Cards can also be Closed Loop Cards. For instance, The Gap Options gift card is usable at Gap, babyGap, GapKids, GapMaternity, Athleta, Old Navy, Banana Republic, and their respective websites owned by the parent company Gap.

These cards make sense when you know the recipient’s choices and preferences. This doesn’t necessarily have to be only to buy things but also places where the recipient likes to dine or where he goes for entertainment.

3. Reloadable cards

Gift givers can choose to give receivers gift cards that can be reloaded. This means that a gift card can be bought and loaded as per convenience from time to time.

4. Non-reloadable cards

Non-reloadable gift cards are those that are bought for one-time use. Givers choose their budget and kind of gift card and send it to the receiver who can redeem it against its full amount, but this cannot be used multiple times by reloading cash/value.

Benefits of Digital Gift Card for Businesses

Everyone can! But we’re going to tell you about how you can use them in your business and the possible ways they can help achieve goals.

1. Employers to employees (rewards & recognition)

Digital gift cards make exciting rewards. While they have both ‘trophy’ and ‘halo’ values, their versatility allows for distribution at award ceremonies or special occasions like birthdays and anniversaries.

Since redemption is something that employees do personally, they can produce a halo effect as employees are reminded of their achievements each time they think of how they will redeem them.

The opportunity to share the experience with near and dear ones adds to its trophy value, and the unexpectedness of receipt makes them special rewards.

Years ago, when Pfizer and Pharmacia merged, it took a dozen people across departments to smoothen the transition. These people worked tirelessly through days and nights.

Liz Shropshall, the director of global compensation at Pfizer, wanted to reward this team by choosing a gift card to deliver them the gift of time. Each team member received a gift card from Service Master of Downers Grove–suitable for a dozen services, including house cleaning, lawn care, carpet cleaning, and pest control.

“We have other recognition programs within the organization, but this one seemed most appropriate. It was an opportunity to give people back the time they had dedicated to the project.” — Shropshall

The employees had a chance to choose the type of service they would like to use, and that added irreplaceable trophy value.

Here are some situations in which you can use digital gift cards for your employees:

  • Employee onboarding: Gift cards can be a thoughtful way of welcoming an employee into the fold when hiring. Giving gift cards (for desk accessories, stationery items, and meal coupons) not only gives new employees the freedom to choose from their favorite brands but also makes them feel more welcome.
  • To build a culture: The drone-based tech company Altitude Angel conducts hackathons between teams within the company. One team tries to hack the security codes built while the other protects them. The winning team gets bragging rights and some gift cards as rewards. Gamification is a great tool that helps foster teamwork.
  • As a token of expression of care: Research has shown that gift cards lead to healthier outcomes in employee wellness programs. A study concluded that people who selected gift cards from an array of rewards offered were approximately 25% more likely to complete a wellness challenge than the other participants, holding other relevant factors constant.
  • For employee appraisal and promotions: A promotion is a milestone to be acknowledged. A gift card for a newly promoted employee to celebrate the raise with the family, gift cards to high-end stores, or even gift cards for electronics that would help with work efficiency are ideas.
  • Employee retirement: What better way to say thank you for your service than by giving employees gift cards than to give an employee something timeless that would remind them of the times spent at the workplace?

2. Employers to motivate sales teams (sales incentives)

Gift cards work exceptionally well as incentives for sales reps. Digital gift cards are scalable and allow for many denominations across the globe, thus being flexible enough to reward any incremental sales volume.

Sales teams expect cash and monetary incentives as variable compensation for sales. Gift cards have a higher ‘reward value’ and feel like better recognition for a well-done job.

Giving out gift cards as sales incentives help with:

  • An increase in product demos: Increased product demos are likely to convert into increased sales. Thus, incentivizing sales teams to give better and more product demos would be incredibly beneficial for business.
  • Increased sales volumes: Instant gratification is one of the best motivational factors to drive performance.
  • Higher participation in training for better sales: Incentivizing attendance in training programs through digital gift cards is one way of showing your sales team that they have something personal to gain. A digital gift card for a cheat meal or to indulge in a fun pastime or stress-buster like gaming would be a fair incentive.

3. Businesses to customers (consumer/sales promotions)

Gift cards to consumers in B2C businesses are prevalent. Their versatile nature allows their use for all kinds of products and services. They also make for great tools for cross-promotions.

Gift cards are easy to roll out and can be distributed at various touchpoints in the AARRR journey.

  • Acquisition (As an account-opener): One way to set yourself apart is to offer a potential customer something another business does not. Sending out gift cards to potential customers is a great acquisition strategy and encourages them to open an account with your business. For instance, send out a digital gift card for a freebie from a family store when a customer purchases from your business.
  • Activation (On the first purchase): Welcoming someone with a gift is a way to show warmth. Giving a new customer a gift card on their first purchase or maybe something that gives them a benefit on their next purchase is not just an excellent way to say we value you as a customer but also turns them into repeat customers.
  • Retention (As small unexpected gifts): Who doesn’t enjoy receiving gifts on special occasions? Many businesses collect data, giving customers access to their special days like birthdays and anniversaries. These are good occasions to send digital gift cards - maybe via email or text! It’s simple yet memorable. It may not be something a customer expects, but it becomes memorable too. It acts as a reason for the customer to stay loyal.
  • Revenue (Encourage purchase through contests): Last year, James Allen, a jewelry brand, ran an exciting contest. The contest asked people to identify a ring they liked and “drop a hint” to their partner. That dropping of a hint is the entry into the game and makes the winner eligible to receive a $2500 gift card!

    We’ve already discussed the research that shows how a gift cardholder spends a lot more than the value of the gift card. Gift cards as contest rewards can be an effective tool to increase revenue.
  • Referral (As referral rewards): Casper mattresses have a referral program where they give out $75 Amazon gift cards to customers who refer new customers, and the referred customer gets 25% off on their purchase.

    An effective referral program is brilliant advertising for any business. With the right referral incentives, the likelihood of the success of the program multiplies. With digital gift cards as reward options, easier logistics allow for smaller budgets and better results.

4. Businesses to channel partners (Channel Incentives)

Monetary incentives such as discounts and rebates are common and expected in most distribution channels. Still, gift cards can make an incentive program more targeted and memorable while keeping within budget.

Flexcon Industries, a manufacturer of water pressure tanks, relied heavily on its distributors. Usually, the company gives two incentive pushes - one at the beginning of the year and the other mid-year. The company gave out branded apparel as incentives. They soon realized that this required a significant investment upfront, and there was also the problem of quantity and size.

So they switched to gift cards and gave out gift cards redeemable for live lobsters or fresh steaks - luxury food items that most people wouldn’t ordinarily invest in. Flexcon rolled out gift cards on a points-based system based on the number and sizes of tanks that dealers purchased.

The program became a big hit among the dealers, and in the two states where the company employed this strategy, sales increased by 23% over the previous year.

So gift cards are used to spur channel partners to participate in new product training, increase overall sales/purchase volume, push a particular product or line, and more.

Here are some more examples:

  • Channel partner incentives to boost sales: The Tata Group has a TATA Delight Program for its dealers and distributors. Every vehicle registration by the partner gets points that accumulate and are redeemable through a multi-store gift card at the stores of their program partners. The TATA brands like Westside, Big Bazaar, Titan, etc., are all program partners where channel partners can redeem points.
  • Better relationship catalyst with new partners: Microsoft asks for feedback from partners who have newly onboarded the team. For Microsoft to improve, they invite newly onboarded partners to participate in a usability study. Participants who agreed to a 45-minute survey interview received a $25 Microsoft gift card.
  • Affiliate incentives to increase sales through referrals: Amazon has the world’s most extensive affiliate program. Several people who sell products refer to other products on Amazon and get a commission from any sale made through their referral channel. Amazon makes payments via cheque, deposit, or Amazon gift cards.

Key Takeaways

  • Digital gift cards are the undisputed future of incentives. Not only are a large number of businesses making the shift, but these have also become a receiver favorite, too, especially since a large part of the target audience is tech-savvy.
  • Physical gift cards are cumbersome, especially logistically for an organization building a campaign around them. Digital gift cards, on the other hand, are easier to disburse, more convenient to use, and allow for freedom of choice when it comes to redemption mechanisms.
  • Digital gift cards serve as universal and versatile rewards that can cater to all reward campaigns - customers, employees, sales teams, and channel partners.
  • Digital gift cards are available in various options that allow extensive freedom of choice for both the giver and the receiver.
  • Digital gift cards allow the giver flexibility of budget and thus cater to different persona to fulfill different goals.
  • The blueprint for a successful gift card campaign clearly defines objectives and takes systematic steps toward campaign roll-out. Tracking and measuring are vital parts of the campaign to ensure better campaigns in the future.
  • Choosing the right partner is sacrosanct. The program's success depends highly on the partner and software chosen to run the campaign. Having a partner that doesn’t provide the requisite support needed during the course of the campaign could lead to a major failure.

Since choosing the right partner is so important, we’re sure you’re on the hunt for one. You don’t need to go too far! You’re in the right place. Come over and take a demo with Xoxoday so we can understand your needs and help put together a digital gift card program that aligns with your needs and goals.

Neha Surana

Neha Surana

I help businesses in spreading delight to their customers at Xoxoday. When I’m not working as a content manager, I love doodling, painting, and cooking.